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View all search resultsRupiah appreciates ahead of Fed's meeting
(JP/Nurhayati)The rupiah advanced against the US dollar on Thursday following expectations that the US Federal Reserve (Fed) would not increase its benchmark interest rate
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(JP/Nurhayati) (JP/Nurhayati)
(JP/Nurhayati)
The rupiah advanced against the US dollar on Thursday following expectations that the US Federal Reserve (Fed) would not increase its benchmark interest rate.
The rupiah exchange rate traded among banks in Jakarta on Thursday morning strengthened by 16 points to Rp 14,443 per US dollar from Rp 14,459.
PT Platon Niaga Berjangka analyst Lukman Leong said in Jakarta that the US dollar had depreciated ahead of the Fed's announcement about its fund rate policy decision. US economic data lowered market expectations that the Fed would increase its fund rate.
'August's inflation data in the US tended to stay flat. This condition had reduced the chance that the Fed would increase its interest rate. The inflation rate is one of the references the Fed uses to decide whether or not to increase its interest rate,' Lukman said as quoted by Antara.
The analyst further said that results of polls commissioned by several institutions had also revealed the Fed's tendency to maintain its interest rate. On the other hand, he added, the crude oil Brent price, which rose by 4 percent, had added negative sentiments to the US dollar against the majority of the world's currencies, including the rupiah.
Valbury Asia Securities research and analysis vice president, Nico Omer Jonckheere, said if the US interest rate increased in September, it was hoped that the US monetary authority could follow it up by issuing a new stimulus, that would include a quantitative easing (QE) policy to maintain the liquidity of the market.
'If the Fed increases its interest rate but it is not followed up with a QE issuance, assets in developing countries will likely plunge deeper because the liquidity will dry up in countries across the world,' said Jonckheere.
He predicted that the rupiah exchange rate could touch the level of Rp 15,000 per US dollar if the Fed increased its interest rate. However, he added, investors did not need to respond it too much because the currency weakening had occurred not only in Indonesia, but also in other countries in Southeast Asia, such as Malaysia, Singapore and Thailand. (ebf)(++++)
